The pandemic has decimated the live events industry, but Josh Katz believes there’s one silver lining – by turning off the revenue taps of industry giants such as LiveNation and its subsidiary Ticketmaster, the hiatus has created space for innovation.
Katz is hoping to fill it with YellowHeart, a blockchain-based platform that gives event organisers of all sizes control not over how their tickets are sold, but resold. The New York-based entrepreneur wants to erode a secondary ticket market that was pushing $15 billion a year before Covid-19 took hold. Traditional ticketing platforms are “socially irresponsible,” he says, “and that’s where we come into play.”
Katz founded YellowHeart in 2017, but he’s been building the knowledge base beneath it for decades. An avid guitar collector, he began his career at Arista, a Sony subsidiary, before moving into marketing at Jive, where he played a hand in launching the careers of Britney Spears and NSYNC. The curtains to this “wild time” came down in late 2003 when his father passed. “When you lose somebody so close, you have a wake-up call,” Katz says. Determined “not to have any regrets,” he began to pursue an entrepreneurial life.
Katz got into blockchain technology almost by accident. In 2017, he sold El Media Group (EMG), then North America’s leading custom music playlist provider, to Searchlight Capital Partners, but a contractual oversight left him responsible for the company’s Manhattan office. Swerving a sub-let, he converted the space into a “playpen”, where he’d mine and trade Ethereum, inviting some of the city’s leading crypto-minds to populate it. It was a “freaking tear,” he recalls, “because you couldn’t place a bad bet [on cryptocurrency]!”
Away from this, Katz began to contemplate his next business venture, and he sought to use the talent pool at his disposal. The idea for YellowHeart came in July 2017, when he paid thousands of dollars for a pair of tickets to see Phish perform at Madison Square Garden. The face value was only $140 and, while he was happy to pay, he felt aggrieved because the markup went to the “scalpers” rather than his favourite band, their management, or even staff at the venues hosting the events. None of it actually supported the music industry. Realising that blockchain technology could solve this problem, he commissioned his developers to build the world’s first “socially responsible” ticketing platform.
By running sales through the open-source blockchain, in effect a distributed ledger dispersed across a network of computers, YellowHeart allows artists to track the entire ticketing lifecycle. This means that tickets can’t be sold without the original artist knowing about it. Through smart contracts, they can set rules to govern how each ticket is resold. For example, they can prohibit a resale altogether or set a maximum price; they can even stipulate that a cut of any future resale comes back to them. Through caring for the artist and providing them with the tools to “do right” by their fans, YellowHeart keeps more money in music’s ecosystem, Katz says. Contrast this with traditional ticketing platforms, which have “done nothing” to stop scalping, meaning fans are “always getting taken advantage of.”
Even beyond rule-based ticketing, YellowHeart enables a much better experience, Katz says. The platform enables a piece of digital multimedia to be included in each ticket, so each fan leaves with a digital collectible with provable scarcity, or a non-fungible token (NFT) – a means of ownership for digital property which boomed in popularity earlier this year. After the event, these can be traded, with their authenticity verifiable through a chain of providence. “Tickets shouldn’t just die once they’ve been scanned,” Katz says.